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You work in the accounting department of a major flat-screen television manufacturer. Demand for your...

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Accounting

You work in the accounting department of a major flat-screen television manufacturer. Demand for your product is very high. These televisions sell for $2,500 each. An offer has arrived on your desk from a major retailer to buy 100,000 televisions with 10 equal annual payments of $20 million starting immediately. The current interest rate is 6%.

Required:

What is the present value of the order? Do you advise your employer to accept or reject it? Justify your decision.

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